Profits climb at GE Transportation

In this Tuesday, Feb. 26, 2013, photo, a General Electric logo is seen on a refrigerator at Green's, a furniture and appliance store, in Albany, N.Y. General Electric Co. reports quarterly financial results before the market opens on Friday, April 19, 2013. (AP Photo/Mike Groll)AP

GE Transportation is expected to cite lagging productivity statistics Monday as it begins the so-called decision bargaining process with its union workforce in Lawrence Park.

But General Electric's latest earnings report won't provide the company with much of a bargaining chip.

The first quarter of 2013 was a strong one for GE Transportation, which reported Friday that profits rose 15 percent to $267 million for the first three months of the year. That was the third-highest profit growth reported by any General Electric Co. business.

Meanwhile, revenues -- the GE Transportation's total sales -- grew 12 percent compared with the first quarter of 2012 to $1.4 billion.

That news comes as negotiators for the company and Local 506 of the United Electrical, Radio and Machine Workers of America get ready to begin meetings.

The company, which recently announced plans to eliminate 950 union jobs and 100 management positions in Lawrence Park, has indicated it is willing to reduce that number if it can reach agreement with the union on issues tied to productivity.

The union, supported by Friday's earnings report, seems likely to note the continued performance of GE Transportation, which earned more than $1 billion in 2012, a record profit.

Scott Duke, who started work this week as president of Local 506, said he wasn't surprised by the results, and believes the latest numbers bolster the union's position.

"We are the skilled workforce," he said. "I feel that as long as profits are up, keep your profits up and keep the work here."

But not all of the numbers were good.

GE Transportation reported that during the most recent quarter, orders declined 26 percent compared with the first quarter of 2012. And during that same period, locomotive orders were off 70 percent.

"GE Transportation's long-term outlook remains strong, however current economic conditions are different from what industry experts forecast as recently as a year ago," he said. "As we look ahead we expect continued softness of locomotive and mining equipment orders, which is creating pressure and uncertainty in the second half of 2013."

Simonelli concluded with a statement that reflects the company's plan to eliminate jobs in Erie, moving some of the work to what the company calls a more productive plant in Fort Worth, Texas.

"As a result of the market conditions and the decrease in volume projections, we must take steps to remain competitive," he said.

Meanwhile, GE Transportation's parent company, Connecticut-based General Electric Co., said earnings rose in the first quarter on increased profits from selling aircraft engines and transportation equipment and the sale of NBC. But results were held back by economic conditions in Europe that were worse than expected.

GE reported net income of $3.5 billion on revenue of $35 billion. During the first quarter of 2012, GE earned $3 billion on $35.2 billion in revenue.

GE Chief Executive Jeff Immelt said in a statement that operations in emerging markets and the U.S. performed about as well as expected. But Europe -- which he thought would be bad -- worsened. Revenue from the region fell 17 percent.

"Some of our markets were more challenging than expected," Immelt said Friday.